In January 2025, the Caixin China Manufacturing Purchasing Managers’ Index (PMI) fell by 0.4% compared to December last year, continuing its decline from the previous month by 1.0%. This indicates a continued slowdown in the operating activities of China’s manufacturing industry.
According to a report by Caixin on February 3, the Caixin China Manufacturing PMI recorded 50.1 in January, a decrease of 0.4%, marking a low point in nearly four months. In December 2024, the index was at 50.5, dropping by 1.0% from November.
The PMI uses 50 as the dividing line: when the index is above 50, it indicates expansion, while below 50 signifies contraction.
The report mentions that in January, the Purchasing Managers’ Index was still in the expansion zone, driven by increased orders and accelerated production, with manufacturing enterprises continuing to increase the purchase of raw materials.
Despite the expansion in supply and demand, employment in the manufacturing industry has significantly deteriorated. The employment index in January fell to its lowest level since March 2020, possibly due to employees returning home early for the Lunar New Year and cost-cutting measures by companies.
The index for purchased material prices dropped from the expansion zone to the threshold of 50, while the output price index has been in the contraction zone for the past two months, with a widening decrease, indicating that manufacturing enterprises are facing steady costs but declining sales prices, squeezing profits.
In January, exports remained under pressure, with declines in exports of consumer goods and investment goods, and the new export orders index staying below the threshold for the second consecutive month.
Wang Zhe, a senior economist at Caixin Insight, pointed out the challenges primarily lie in significant employment contraction, weak external demand, and low price levels. Against the backdrop of increased overseas policy uncertainties, the export environment may deteriorate, posing a significant challenge to the Chinese economy. Insufficient domestic effective demand and the need to boost consumer purchasing power.
Earlier on January 27, the National Bureau of Statistics of China announced a manufacturing PMI of 49.1 for January, which not only fell short of market expectations but also marked the weakest performance since August last year.
According to Reuters, the Caixin survey has a smaller scope and focuses more on export-oriented enterprises.